Can I Have a Roth Check Book IRA?
By Alisha Bennett
Yes, you can. To paraphrase:
As you know, the beauty of a Roth IRA is that earnings are tax free. Part of this comes down to deciding that you are either saving money now with a standard IRA where contributions are tax-deferred or later, when your earnings have had time to grow. Of course, we are more likely to spend savings (even tax deferred savings) if we have access to them now. Roth IRAs are about a trade-off and estimating what that trade-off is worth to you.
A Roth Check Book IRA gives you not only control over your investments today but can bring greater rewards in the future because your earnings are tax-deferred. After all, why should anyone else (the IRS or your Custodian) take a piece of the investments that you have worked so hard to create and manage?
There are of course a few things to keep in mind. You must qualify for a normal Roth IRA before you can setup a Roth Check Book IRA (you can find a quick run-down of the requirements here) and there are some income limitations on who can contribute.
With this winning IRA structure the possibilities are almost limitless for the types of investments that a Roth can take advantage of. If stocks, bonds, mutual funds and precious metals have worked well for you; you can still continue these types of investments. The control of when to sell, how much to buy and where to diversify however, will be in your capable hands. Non-traditional options such as tax liens, real estate, partnerships, franchise businesses and the list goes on are now fully accessible. As with a regular Roth account collectibles and life insurance policies are still a no-no; but that hardly diminishes the pool of opportunities.
Finally, when your beneficiary inherits your Roth, they can use the funds tax free until they are 81 years of age! Any subsequent earnings can be immediately withdrawn with no taxable consequences. This is a very valuable estate planning tool (stay tuned for further articles on this topic).
So to summarize…..you CAN have a Roth Check Book IRA. Furthermore, the rewards of using this investment vehicle to increase your savings without tax consequences for you AND your beneficiaries might instead bring to bear the question……….why wouldn’t I have a Roth Check Book IRA?